IMF WORKING PAPER: REAL WAGE, LABOUR PRODUCTIVITY AND EMPLOYMENT TRENDS IN SOUTH AFRICA

Real Wage, Labor Productivity, and Employment Trends in South Africa: A Closer Look

In a recently published International Monetary Fund Working Paper it is recorded that during the recent economic ‘recession’, South Africa’s real wages grew. This, says THSBS’s Don Leffler,impacted positively on informal employment but impacted negatively on formal employment.

The Working Paper is fairly academic but does show that whilst there has been high job shredding there has been an increase in non-permanent employment. The costs to an employer for a temporary / non-permanent employee have been structured to be less expensive for the employer.

Whilst this approach is not unusual in recessionary times, says Don Leffler, it does have long-term implications as it changes the approach to permanent (‘secure’) employment. There are inevitably impacts on productivity. This creates an interesting debate and, again, begs the question as to whether South Africa’s strict employment laws are a barrier to economic growth and increased ‘secure’ employment.